Its three months left to the financial year end and salaried employees now have to think of investing to save tax. If you ask any life insurance financial planner, he/she would suggest taking a new policy. Well you can do this based on your requirement but do not do it just to save tax. Every person is eligible for Rs 1,50,00 of tax saving. Below are 3 taxes saving investment options.
Equity Linked Saving Scheme (ELSS)
Modi’s demonetization scheme must have made you deposit some old notes in your bank account, which in turn might have become idle cash. Invest in equity-linked savings scheme (ELSS), which is a type of mutual fund that has a lock in period of 3 years. With Systematic Investment Plan (SIP) you can spread your investment over three months thereby reducing risk associated with lump-sum investments.
This investment is eligible for tax deduction under 80C. This lock in period is lowest among available investment options, plus this does not have a fixed maturity date.
Instead of a 5 year investment in Mutual Fund, you can opt to voluntarily contribute your extra cash to Employee Provident Fund. This contribution is eligible for tax exemption under 80C.
5 Year Fixed Deposit
With demonetization of higher value notes, people are forced to deposit their currency in their bank account. Now citizens of India are limited to withdraw Rs 4,000- Rs 10,000 in a week, forcing the currency to stay in banks. With this effect banks have surplus money and they are changing interest rates to generate income from the currency received. Good news is loans will be given out at lower interest but the bad news is, deposits in bank will generate lower interest.
A five year fixed deposit would give the lowest interest when compared to EPF and ELSS but your investment will grow at a fixed rate every year. Only FDs with lock in period of 5 years are eligible for tax exemption under 80C. Before the emergence of digital channels people invested only in FDs to get income on their savings.
Apart from these three, health insurance policy upto Rs 5000 is also tax free. Based on your requirement invest in life insurance, pay your home loans, and put the remaining amount in the above three options. Read more Indian Business News.